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respect to the entire amount of the deficiency in each of 1984,
1985, and 1987.8
With respect to petitioners’ taxable year 1988, section
6653(a)(1) would impose an addition to tax equal to 5 percent of
the entire amount of an underpayment if any part of the
underpayment is due to negligence or intentional disregard of
rules or regulations. Respondent determined that petitioners are
liable for the section 6653(a)(1) addition to tax with respect to
the entire amount of the deficiency in 1988.
With respect to petitioners’ taxable year 1989, section
6662(a) would impose a 20-percent accuracy-related penalty on the
portion of an underpayment attributable to any one of various
factors, one of which is “negligence or disregard of rules or
regulations”. Sec. 6662(b)(1). The section 6662(a) penalty is
not imposed on any portion of an underpayment where a taxpayer
has “reasonable cause for” and “acted in good faith with respect
to” such portion. Sec. 6664(c)(1).
Negligence is defined as the “‘lack of due care or failure
to do what a reasonable and ordinarily prudent person would do
under the circumstances.’” Neely v. Commissioner, 85 T.C. 934,
947 (1985) (quoting Marcello v. Commissioner, 380 F.2d 499, 506
8The amount reflected in the notice of deficiency for the
sec. 6653(a)(1)(A) addition to tax in 1987 appears to be
incorrect, in that it exceeds 5 percent of the deficiency in that
year. The correct calculation should be made by the parties
pursuant to the Rule 155 computations.
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